New Predictive PPC Tool: Paid Search Return Estimations

Michael Wiegand May 8 2009

The Paid Search Problem

Let’s be honest. All too often, starting or optimizing a paid search campaign is a guessing game. You make obvious changes to your keyword list, rewrite some ads, and setup a new landing page – but for the most part, it’s like a Jackson Pollock painting. You throw a bunch of things at a canvas and hope for a work of art. If that doesn’t work, you whitewash the canvas and start over. To be fair, there are tools that will give you a fairly good indication of what you’ll pay for a term, what kind of traffic to expect, and what your competitors’ ads look like. But what’s missing from that equation? Return on investment.

The Paid Search Solution

Here at Portent, we’ve devised a simple tool – a spreadsheet that shows roughly what you stand to spend, and more importantly, what you stand to gain from newly proposed keywords. How does it work? It’s based on two assumptions: Per visit value (PVV) and Click through rate (CTR) from paid search sources. If you’ve run any test campaigns in the past, these two stats are easily found in Google Analytics. (See screenshots: find PVV, find CTR) If you can’t find these easily for paid search sources – just use per visit value for your site in general, and derive click through rate directly from Google AdWords, Yahoo Search Marketing, or MSN AdCenter. Why are these two stats important? Per visit value establishes what the average visitor to your site is worth. Click through rate establishes an assumed percentage of people that will reach your site from the ads you show. With that said…

Using the Predictive PPC Tool

For best results, be sure to go back six months to a year in Analytics when obtaining these stats. It’ll give a more complete picture of how your site normally performs on paid search traffic.

Step 3: Do your normal keyword research and export your chosen terms in any format you can open in Excel. (See screenshot: export for Excel)

Google’s External Keyword Tool works nicely. Which tool you use isn’t necessarily important though, as long as you can determine two more stats about the keywords you’re researching: estimated Cost per click (CPC) and Monthly search volume.

Step 4: Copy & paste (as Values) the keyword, estimated CPC, and Monthly search volume from the .csv file to the appropriate columns in the tool. And, voila! (See screenshots: copy and paste) This tool will give you estimations for how many clicks you can expect, how much you will spend per month, and how much revenue you stand to make. From that, it also determines an estimated ROI percentage – the holy grail of any paid search effort.

Caveats & Interpreting The Results

Obviously, there are some considerations. You can’t go proclaiming these figures as gospel truths at your next company/client budget meeting. The tool assumes (presumes?) a lot:a) that you have the budgetary resources to buy every click available to you,b) that your ads are running 24/7, and c) that your per visit value and click through rate figures are indeed accurate. But this tool is capable of finding the proverbial ceiling for your keyword suggestions. More vital though, it gives you an idea of how much revenue you might be leaving on the table if you don’t buy certain keywords. And that can give you all the ammunition you need to make sweeping PPC changes with more confidence.

Analytics Architect

In 12 years as a marketer, Michael's experience has run the gamut from design, development, direct mail, multivariate testing, print and search. But his new flame is analytics. Outside of work, he enjoys the finer things: cooking, JRPGs, music and whiskey - in no particular order. Read More

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